You can tell the orc you will keep an eye out for the axe just to simply get past him.
You still don't have to complete the quest once you find the axe, he is an orc after all and you don't owe him anything. I actually had an undead join up with me without the choice of saying no, so I led him back to the orcs. It was taking out the smaller orcs until the big one finished him off. This wasn't taken as a sign of aggresion since I just stood back and watch them fight.
I never went back to try and kill the big orc but since you have me thinking about it, maybe I will just do that. <img src="/ubbthreads/images/graemlins/badsmile2.gif" alt="" />
